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Thursday, July 30, 2009

Options Regulatory Alert #2009 - 8
New Large Option Positions Report for Compliance with the Options Symbology Initiative

Markets Impacted:

  • NASDAQ OMX PHLX
  • The NASDAQ Options Market

Contact Information:

What you need to know:

  • As part of the Options Symbology Initiative (OSI), all exchange-traded options are expected to be described using explicit data elements instead of the current OPRA codes by February 12, 2010.
  • The OSI explicit options identifiers requirement will require changes to the existing Large Option Position Report (LOPR) layouts for members and exchanges.

What has changed?

In June 2008, The Options Clearing Corporation (OCC) and its participant exchanges, including NASDAQ OMX PHLXSM (PHLX®) and The NASDAQ Options MarketSM, began implementation of the Option Symbology Initiative (OSI). As part of this initiative, all exchange-traded options are expected to be described using explicit data elements instead of the current Options Price Reporting Authority (OPRA) codes by February 12, 2010. The OSI explicit options identifiers requirement will require changes to the existing Large Option Position Report (LOPR) layouts for members and exchanges. The new LOPR will differ significantly from the current fixed length report.

What are the new LOPR requirements?

The new requirements are as follows:

  • OCC will begin collecting and disseminating LOPR data during the fourth quarter of 2009.
  • The Security Industry Automation Corporation (SIAC) will no longer accept LOPR data after January 19, 2010.
  • LOPR data must be submitted each business day to OCC in FIXML format by 8:00 p.m., CST.
  • Positions must be reported to LOPR by T+1.
  • The window for submitting updates related to adjustments, assignments, error corrections and position transfers will be reduced from T+10 to T+ 5 — any submission for a date after T+ 5 will be rejected.
  • Only new, modified or deleted positions should be reported to OCC; unchanged positions submitted to OCC will be rejected.
  • Members will be able to delete previously submitted records and include text explaining the reason for the deletion (e.g. “entered in error”).
  • OCC will automatically purge expired option series.
  • OCC will purge all option series affected by corporate actions on the ex-date of the corporate action; members must transmit new LOPR submissions as adds to replace the purged positions.
  • “In Concert” data is to be submitted directly to OCC; a separate report to the exchanges will no longer be necessary.
  • Member Firms will receive a daily report of their rejected LOPR records from OCC and are responsible for promptly correcting and re-submitting rejected records. OCC will provide a report of all rejected LOPR records to the exchanges.
  • Hedge information can be reported via LOPR; the separate “LOPR Hedge Report” will be eliminated.

What are the implementation dates associated with the new LOPR requirements?

Implementation of the new LOPR requirements will follow the schedule below:

  • August 17, 2009 – November 19, 2009: LOPR firms perform External Testing with OCC.
  • Completed by September 30, 2009: LOPR firms must verify connectivity to OCC External Test Environment.
  • October 1, 2009:
    • LOPR firms may continue external testing if needed.
    • LOPR firms can begin sending Production LOPRs to OCC’s production environment once external testing is deemed successful.
  • Completed by November 23, 2009: LOPR firms must transmit production LOPR data to OCC on a daily basis and maintain their LOPRs at OCC.
  • Fourth Quarter 2009 – January 15, 2010:
    • Simultaneous submission of LOPR data to SIAC and OCC.
    • SROs will work with firms to confirm the accuracy of their submission to OCC.
  • January 19, 2010: LOPR firms may stop sending LOPR data to SIAC.

OCC has published a guide containing the new LOPR record layouts, a detailed explanation of fields and mapping of OCC fields to current SIAC fields. Refer to the OCC website for the guide, a list of LOPR Frequently Asked Questions (FAQ) and further information related to connectivity and testing. Please note this alert only provides a brief summary of the key requirements and changes related to the new LOPR. Members are required to read and comply with the requirements described in the OCC guide and as further explained in the FAQ.

Where can I find additional information?

  • Refer to the OCC website.
  • For questions regarding NASDAQ OMX PHLX, contact Stephen Pettibone, Vice President, PHLX Options Review, at +1 215 496 5462
  • For questions regarding The NASDAQ Options Market, contact Cindy Retterer at +1 301 978 4961

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